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Blackberry to Go Private

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Blackberry to Go Private

 


Once upon a time, Blackberry (NASDAQ: BBRY) was the smartphone to have. It was the bankers’ phone. The investors all had one too. The traders that were trading anything worth trading all used one. Then, the geeks that worked in the finance world gave it the push and had no qualms about infidelity on Wall Street, by switching to another brand. Apple and Samsung became the must-haves, and Blackberry just went back into the dark shadows, forgotten. It notched up loss after loss after failing to provide a viable alternative to the two hulks that were taking over the market. In thesecond quarter of 2013, the company suffered a loss of $84 million and analysts expect that the company will lose just about the same in the third quarter.


At one time, the value of the company stood at $84 billion in the hey-day of 2008. But, today it is a meager $5 billion. Now, after weeks of speculation, hearsay and wondering, Blackberry has announced that they will be looking for either a private buyer or a strategic partnership that will enable to jointly produce the telephone. The official statement said: “The Company’s Board of Directors has formed a Special Committee to explore strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment. These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.”


Blackberry


Blackberry


Although, despite the fact that they may have at last come up with some decision to act, whether or not they are able to find a private buyer willing to take on the company is another matter. The company has already been squeezed to the extent that it has had to make $1 billion in cuts, by laying off5, 000 people and getting rid of over half of its production sites (six have gone out of ten).


  • In 2012 Blackberry lost the 6.4%-share of the market that it had as it shrank to a paltry 2.9%.

  • Samsung had 32.2% of the mobile phone market.

  • That receded to 30.4% due to gains made by Lenovo, for example.

  • Apple’s share of the market stands at 13.1% of the market, down from 17.3%.


Trading in shares was halted today on the NASDAQ in anticipation of the announcement by Blackberry. But, it will certainly mean that subscribers may start to leave like rats leaving the ship in the fear that Blackberry will go under completely. It will also mean that the company will have to find a buyer or a partner relatively quickly if companies and investors are going to remain at all confident on the viability of the project. Being bought by a private owner would certainly enable the company to be reorganized without the shareholders having their say-so and peering over the shoulders of the executives.


Thorsten Heins, the President and Chief Executive Officer of Blackberry Ltd remained upbeat about the new technology and releases to come: “We continue to see compelling long-term opportunities for BlackBerry 10, we have exceptional technology that customers are embracing, we have a strong balance sheet and we are pleased with the progress that has been made in our transition.”


Although, if it were that upbeat in reality, perhaps the market share wouldn’t be down in the dumps like it is right now and the company would be competing much better with Apple, Samsung and the new arrivals on the market such as Lenovo.


Any takers for a mobile phone company?

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Tech Trading Ideas

 

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